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. Last Updated: 07/27/2016

Selling the Rights to 'Russia'

Who owns "Russia"? The government does. The word, that is.


It may seem strange to put a trademark on a country's name, but that is basically what a curious Russian government resolution attempts to do.


The resolution, revised last December after being first approved in 1992, restricts the use of the words "Russia," "Russian Federation," "Russian," "federal" and derivatives of those words in the names of private companies and nongovernmental organizations or institutions. The resolution does not apply to political parties, labor unions, religious associations and associations with the status "All-Russian."


To determine which private companies have the right to incorporate the country's name into a private moniker, the resolution requires a governmental commission to judge each case.


Once a company or organization satisfies the committee that it is worthy of incorporating "Russia" into its name, it must then pay for the privilege. The state levies a special tax on companies using the name "Russia," which varies depending on the nature of the organization. Most firms are required to hand over .5 percent of sales; trading companies are taxed .05 percent of turnover.


In Russia, a country struggling for an identity after the collapse of the Soviet Union, a legal attempt to define state symbols could appear rather forced. But legal experts say the resolution is not as peculiar as it seems.


"It's really intended to prevent a company from giving itself a name which somehow implies that it is sanctioned by the state," said Anya Goldin, a lawyer with Latham & Watkins. "It is to stop people from creating a private company and calling it, for instance, the Mutual Fund of the Russian Federation."


The resolution itself says the aim is to prevent state and nonstate organizations from adopting "practically indiscernible names" which might "mislead the citizens."


"If a person sees a company with 'Russian Federation' in its name offering something, they would probably assume that it is a respectful government company," said Alexander Bychkov, a lawyer with Baker & McKenzie.


The resolution, which legal experts believe has not been strictly enforced, was revised to clarify the earlier version and to crack down on violations. The new version (No. 1463) calls for the government commission to "check up" by the year 2000 on all organizations in question, but it doesn't say what mechanism should be used to do so.


"The commission has been dormant until now. It may be more active after the latest resolution," Bychkov said. "If the commission works effectively, it could decide to ask organizations using those words in their names to change their registration documents."


The new version also spells out the criteria the commission should use to decide whether an organization qualifies to co-opt the country's name. It says the commission should look at the "importance, nature, scope and sphere of activities" of organizations and whether they produce goods and services unique to Russia.


Legal experts say the organization's size is a likely consideration, and if a company or institution has branches in several regions, it may pass the test.


At first glance, the resolution might appear to affect a wide spectrum of existing organizations, were it not for the subtleties of the Russian language.


In Russian, the words Russky and Rossiisky have different meanings. Russky carries an ethnic connotation, while Rossiisky is used only to refer to the state. Therefore, the resolution would probably not apply to organizations using forms of Russky, such as the fast-food chain Russkoye Bistro, but would apply to those using Rossiisky, such as Bank Rossiisky Kredit.


However, legal experts say the language of the law is unclear. Derivatives of the word Rossiisky could include Russky or even Rus, but the resolution does not go into specifics.


Some lawyers advise clients simply not to use the word. "We normally explain the legal implications, and once they find out, they usually decide not to use the word in their name," said Melissa Lundstedt, a lawyer with White & Case.


Lawyers interviewed for this article were not aware of any similar laws elsewhere regulating or taxing the use of a country's name. However, companies wishing to use the word "Moscow" in their names must get a special license from municipal authorities.